Quality healthcare plays a crucial role in improving the lives of the poor. In many developing countries, however, high-quality healthcare can be hard to come by.

This is particularly true in India, where public sector medical care is often plagued with high rates of absenteeism and where private sector care is costly and of low quality. As a result, the country’s poor populations tend to have a low opinion of medical professionals, leading them to consult unqualified practitioners, or even no one at all, when they are sick.

A new discussion paper by Clara Delavallade, Quality Healthcare and Health Insurance Retention: Evidence from a Randomized Experiment in Kolkata Slums, examines how a twist on traditional microinsurance could help increase trust in, and the use of, quality medical care. The program was run between December 2010 and March 2012 by the NGO Calcutta Kids in Fakir Bagan, an urban slum in Howrah, West Bengal, and offered free wellness checkups with a certified doctor to a randomly selected group of microinsurance policyholders. The program was offered to 82 households, 55 of which took advantage of the service. Households with a female primary insurance holder were more likely to attend the checkup, highlighting the perception that family health seems to be considered a woman’s domain.

Delavallade finds that the free checkups had two important effects. First, they seem to improve participants’ beliefs about the benefits of medical care. In the two months following participation in the program, policyholders who took advantage of the free checkup were 12 percent more likely to consult a qualified medical practitioner when they fell ill than those who did not receive the checkup.

Second, policyholders who received checkups reported being willing to pay Rs. 81 (US$1.30) more to renew their health insurance than policyholders who were not invited to receive the free service—a 51 percent increase. Delavallade points out that this willingness to pay more is not due to a change in households’ financial status or an improvement in their actual health status, but rather to participants’ increased trust in the medical care they received through their insurance company.

The study has several implications, both for policymakers concerned with improving poor populations’ access to and use of quality healthcare and for insurance companies concerned with improving customer retention rates. Exposing people to high-quality, affordable—or, in this case, free—medical care can increase their trust in healthcare professionals and their likelihood of seeking out medical care in the future, leading to improved health outcomes for entire households. Offering an unconditional benefit (i.e. a benefit that is offered regardless of whether or not a customer has filed an insurance claim) such as a free checkup can also be a cost-effective way for insurance companies to retain policyholders who may otherwise not be willing to pay for services. This latter result clearly benefits insurance companies, but it could also benefit poor populations by encouraging them to take advantage of services that can reduce their risk and improve their quality of life.

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